notice received ..., page-38

"Sundance is exploring several models for bringing Strategic Partners into the Project which may include the granting of equity in the Mbalam Project in return for securing long term off-take agreements and the guarantee of project finance.
The level of equity participation or the model to be used has not yet been determined, but the Company would not consider selling more than 50% of its current interest."


The way i read this it seems to me that on a worse case scenario SDL will sell no more than 49% of its stake in the "project" to a partner who in receiving its 49% equity in the "project" will have to both inject the $4 billion required to finance the project and also have contracts in place to buy some or all of the iron that the project will generate. Once again on a worse case scenario this would imply that the value of whats left of the project in percentage terms to SDL: after the governemnts cut will then be worth over $4 billion dollars based on simple equity accounting principles. This would indicate a value per share of around $1.40 to me.

On a best case scenario i also read that by saying it may include the granting of equity, they may find a partner who is willing to provide the finance by way of loans in exchange for guaranteed supply of Iron at favourable prices. Under this scenario SDL would retain way more than 51% of the project.

China needs the Iron and doesn't want to be controlled by the 3 majors in terms of pricing and if the SDL management can take control here they can show the Chinese that by helping them get the project off the ground they will indirectly benefit by helping long term Iron prices come well off their highs as the new supply comes to market. If the Chinese don't help SDL then they better get used to Iron Ore prices remaining high.